Author: Derek Higa

Derek Higa is a senior equity analyst and a lead for the APAC region and the Consumer Cyclical sector. He serves on the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets, and compiles Asia Watch, a weekly recap of regional investing news. Since joining William O’Neil + Company in 2005, he has lent his market expertise to alpha capture, product development, and historical studies on outperforming stocks. Derek graduated summa cum laude from California State University Los Angeles with a B.S. in Finance and Information Systems. He holds a Series 65 securities license.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) closed above its 50-DMA and is testing that level. Most markets are in a Confirmed Uptrend and continue to trend positively. We recommend a gradual and selective approach to allocating capital.
  • Nine markets, including Japan, India, China, Taiwan and South Korea, are in a Confirmed Uptrend. Two markets, including Hong Kong, are in an Uptrend Under Pressure. Two markets are in a Rally Attempt.
  • Among the major APAC indices, the Sensex and the Nikkei have outperformed this year, and their year-to-date performance has turned positive. Refer to page 7 for a year-to-date performance comparison of the major APAC markets.
  • The Sensex is approaching a 52-week high and we have seen breadth improve across sectors in India. The Utility, Financial and Basic Material sectors saw significant improvement over the last four weeks. Refer to page 8 for stocks of interest in India.
  • The Nikkei gained above its 200-DMA as the market adjusted for less aggressive expected rate hikes in the U.S. for the rest of the year. The Energy, Technology and Capital Equipment sectors outperformed over the last four weeks. Refer to pages 9 and 10 for stocks of interest in Japan.
  • Highlighted Focus List Idea: ICICI Bank (ICG.IN; ICICIBC IN).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) continues to trade in a tight range below its 50-DMA resistance. We recommend a gradual and selective approach to allocating capital.
  • Seven markets, including Japan, India and South Korea, are in a Confirmed Uptrend. Two markets, including Hong Kong, are in an Uptrend Under Pressure. Four markets are in a Rally Attempt, including China and Taiwan.
  • Hong Kong is in an Uptrend Under Pressure with 13 distribution days. The percentage of liquid stocks trading above their 200-DMA has declined to 22% from 30% eight weeks ago. Refer to page 7 for an annotated chart of the Hang Seng.
  • In Hong Kong, the Health Care and Transportation sectors had positive median gains over the last eight weeks, while all other sectors were negative. Underperformance of the Retail Internet, Internet Content, Banks and Real Estate Developers industry groups dragged the index down.
  • Hong Kong had 13 distribution days over the last 25 sessions, which is the highest for 25 years. We recommend investors maintain a cautious approach until distribution days decline. Five distribution days will expire in the next seven sessions.
  • Highlighted Focus List Idea: Hindustan Unilever (HDL.IN).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) continues to trade in a tight range below its 50-DMA resistance. Markets remain constructive as most are in a Confirmed Uptrend. We recommend a prudent and gradual approach to adding risk.
  • Seven markets, including Japan, India and South Korea, are in a Confirmed Uptrend. Two markets, including Hong Kong, are in an Uptrend Under Pressure. Three markets are in a Rally Attempt, including Taiwan. China is in a Downtrend.
  • Strength has broadened across APAC, with significant improvement in New Zealand, India and Japan. India is among the strongest APAC markets. We upgraded India to a Confirmed Uptrend from a Rally Attempt after the Sensex staged a day-30 follow-through day. In India, the Consumer Staple, Financial and Basic Material sectors saw the most improvement in terms of the percentage of stocks trading above their 200-DMA in the last four weeks.
  • Refer to pages 9 and 10 for a list of stocks with good technical characteristics from outperforming Industry Groups and themes.
  • Highlighted Focus List Idea: ABB India (AB.IN; ABB IN).

APAC Market Update

Posted on by Derek Higa

Key Points:

  • We upgraded India to a Confirmed Uptrend from a Rally Attempt after the Sensex staged a day-30 follow-through day. The index gained 1.9% on higher volume from the previous session and bounced off its 100-DMA support.
  • We advise investors to gradually increase risk and look for ideas with high relative strength and breaking out of sound bases after holding above logical levels of support. Refer to page 3 for a list of stocks trading near pivots and above their 50- and 200-DMA.
  • In terms of sectors, Capital Equipment and Financial are leading over the past four weeks, while Consumer Cyclical and Consumer Staple are leading over the past 8–13 weeks.
  • Actionable stocks among Focus List ideas include Bharat Electronics (BHE.IN; BHE IN), Hindustan Unilever (HDL.IN; HUVR IN), Indian Hotels (INH.IN; IH IN), and Page Industries (PI1.IN; PAG IN).
  • After today’s status change, seven markets, including India, Japan, and South Korea, are in a Confirmed Uptrend. Three markets, including Hong Kong and China, are in an Uptrend Under Pressure and three markets are in a Rally Attempt.

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) pulled back after testing its declining 21-DMA resistance. We view markets as more constructive as they continue to hold above short-term support levels. However, we expect volatility to rise and markets to remain choppy in the near-term. We recommend a prudent and gradual approach to increasing risk.
  • Six markets, including Japan and South Korea, are in a Confirmed Uptrend. Three markets, including Hong Kong and China, are in an Uptrend Under Pressure. Four markets are in a Rally Attempt, including India and Taiwan.
  • Growth stocks led the rally since the pandemic lows and this leadership continued until January. However, value stocks are leading since February. Refer to page 6 for a comparison chart of the MSCI Asia Value and Growth indices. India is leading in terms of both value and growth stocks compared with other major APAC markets.
  • Stocks from the Consumer Staple, Capital Equipment and Health Care sectors have shown improving momentum and relative outperformance. Refer to page 10 for mini charts of notable outperformers from these sectors.
  • Highlighted Focus List Idea: Hindustan Unilever (HDL.IN; HUVR IN).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • Six markets, including Japan and South Korea, are in a Confirmed Uptrend. Three markets, including Hong Kong and China, are in an Uptrend Under Pressure. Four markets are in a Rally Attempt, including India and Taiwan. Follow-through days in Japan and South Korea are encouraging. However, we expect markets to remain volatile before the FOMC decision next week, as well as the ongoing earnings season. We recommend gradually increasing risk and focusing on quality ideas with rising relative strength.
  • We upgraded Japan to a Confirmed Uptrend from a Rally Attempt, after the Nikkei 225 staged a day-21 follow-through day. Over the past four to eight weeks, the Health Care and Retail sectors have outperformed, while Energy and Basic Material have lagged.
  • The Sensex has outperformed other major APAC markets over the last 52-weeks, with ~4% gain during this period. The Indian Rupee has had better than average performance this year compared with peers. Outperformance of the Sensex, combined with the relative stability of the currency, makes the Indian market stand out compared with other APAC peers.
  • Outperformance of the Sensex can be attributed to India’s strong GDP growth estimates among major economies. There has also been a slowdown in institutional selling this month, after intense selling over the last nine months. The Capital Equipment, Consumer Staple and Consumer Cyclical sectors lead in India. Refer to page 12 for stocks of interest in India.
  • Highlighted Focus List Idea: Tube Investments (TF.IN; TF: IN).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) declined after facing resistance along its 50-DMA and broke below June lows. We continue to be cautious on APAC markets. We expect markets to be choppy heading into the earnings season and release of key macro data.
  • Two markets are in a Confirmed Uptrend. Four markets, including Hong Kong and China, are in an Uptrend Under Pressure. Five markets are in a Rally Attempt, including South Korea, Japan and India. Taiwan and Malaysia are in a Downtrend.
  • Taiwan was the worst performer among major APAC markets over the last three months. It has underperformed due to macro-economic uncertainty and geopolitical tension. Today, the index gained 2.7% as Taiwan announced that it will activate a $17B market stabilization fund to support the falling market. We recommend investors stay patient and gradually increase risk, with a follow-through day.
  • Breadth remains low across APAC with only 30% of liquid stocks trading above their 200-DMA, compared with 38% four weeks ago. Among the 12 markets, only India saw improvement in breadth during this period. There was improvement in stocks above their 200-DMA in the Consumer Staple, Health Care and Retail sectors over the last four weeks. Refer to page 11 for stocks of interest within these three sectors. On the flip side, there is a sharp decline in momentum of the Energy, Utility and Transportation sectors.
  • Highlighted Focus List Idea: Siemens (SIM.IN; SIEM IN).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) is trading in a tight range below its 50-DMA. We continue to be cautious on APAC markets. We expect markets to remain volatile in the near term due to uncertainty regarding Q2 results and key macro data.
  • Four markets, including Hong Kong and China, are in a Confirmed Uptrend. Australia and Indonesia are in an Uptrend Under Pressure. Four markets, including Taiwan, South Korea and Thailand, are in a Downtrend. Three markets, including Japan and India, are in a Rally Attempt.
  • Breadth across Hong Kong market is improving, based on stocks trading above their 200-DMA. The percentage of stocks trading above their 200-DMA is the highest it has been for 26 weeks.
  • In Hong Kong, previously leading sectors, such as Energy, Transportation and Utility, have underperformed over the last four weeks. Retail, HealthCare and Consumer Cyclical were lagging sectors over the last 52-weeks, but have gained momentum in the last few weeks. There has not been significant momentum in the Technology sector compared with other lagging sectors.
  • Highlighted Focus List Idea: Xtep International (XREP.HK; 1368 HK).

APAC Weekly Summary

Posted on by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

  • The MSCI Asia ex. Japan index (AAXJ) is attempting to form a higher low as compared with May levels of $65.40. It has immediate resistance along its 50-DMA. We continue to be cautious on APAC markets. Indices are trading below short-term support levels. We recommend being patient and waiting for volatility to settle before allocating risk.
  • Hong Kong and China are in a Confirmed Uptrend. Indonesia is in an Uptrend Under Pressure. Three markets, including India and Singapore, are in a Rally Attempt. Seven markets, including Japan, Taiwan and South Korea, are in a Downtrend. The Hang Seng continues to trade above its 50-DMA support. Refer to page 10 for a list of outperforming stocks in Hong Kong.
  • The APAC Focus List count has declined more than 50% year-to-date. The Consumer Cyclical and Health Care sectors have the highest weight among our Focus List names. Removals have been relatively lower y/y in developed markets, but have increased in emerging markets, particularly in India. However, India continues to have the highest share of stocks on our Focus List, followed by China.
  • Based on data since November 2015, capitulation has occurred either near the market peak or the bottom and has acted as an indicator for a trend reversal. We believe a capitulation is unlikely in near-term as our Focus List count remains low (36 at present). Alternatively, we can look for an increase in Focus List additions to provide an indication of improving market sentiment.
  • Highlighted Focus List Idea: Yadea (YADE.HK; 1585 HK).